THE rupee showed mixed trend versus foreign currencies in the market this week, amid low dollar demand and its comfortable supply. On the opening day of the week, bearish sentiments were observed in the inter-bank market. The rupee shed three paisa against the US currency on August 8, and traded at Rs59.65 and Rs59.67, compared to its previous week close of Rs59.62 to Rs59.64.

On August 9, the rupee continued its fall versus the dollar. It shed two paisa, changing hands at Rs59.67 and Rs59.69 in relation to the dollar. On August 10, the market did not witness any major change in the rupee/dollar parity. The rupee lost only one paisa against the dollar, trading at Rs59.68 and Rs59.69.

Slight decline in the dollar demand by the importers helped the rupee retain its firmness on August 11. The rupee-dollar parity inched up one paisa, with the dollar trading at Rs59.67 and Rs59.68. On August 12, the parity did not show any change and remained traded at Rs59.67 and Rs59.68. Over the previous week, however, the rupee in the inter bank market lost five paisa against the dollar this week.

In the open market, bullish sentiment was seen on August 8. The rupee managed to gain 15 paisa against the dollar for buying and another 10 paisa for selling to trade at Rs60.30 and Rs60.40, compared to last week’s levels of Rs60.45 and Rs60.50.

Upward trend persisted in the open market on August 9, as the rupee extended its overnight gain, picking up 15 paisa to change hands at Rs60.15 and Rs60.25, amid easy supply of dollar.

Difference between the official and open markets rates narrowed on August 10, on the sharp improvement in the value of the rupee versus the dollar in the open market. Despite the increasing demand for dollar for payment requirements, the rupee managed to gain five paisa and traded at Rs60.10 and Rs60.20.

The rupee most of the time fluctuated in the narrow range on August 11. It recovered 10 paisa versus the dollar and traded at Rs60.00 and Rs60.10 on falling demand for the US currency. The rupee maintained a firm posture versus dollar on August 12, and recovered five paisa to change hands at Rs59.95 and Rs60.00.During the week, however, the rupee in the open market managed to recover 45 paisa against the dollar.

Versus the European single common currency, the rupee shed 10 paisa for buying and 20 paisa for selling on the week’s opening day, changing hands at Rs73.90 and Rs74.20 on August 8, against last weekend’s Rs73.80 and Rs74.00. The rupee, however, resisted further decline versus the euro and recovered 20 paisa to trade at Rs73.70 and Rs74.00 on August 9.

On August 10, the dollar’s recovery knocked down the euro, with the European currency losing 20 paisa in the morning session at Rs73.55 and Rs73.80. On the following day, the rupee recovered 10 paisa and traded at Rs73.75 and Rs73.95 on August 11.

In relation to euro, the rupee, however, lost 30 paisa to trade at Rs74 and Rs74.25 for buying and selling, respectively, in rising demand for the single European currency on August 12. The rupee lost 25 paisa against the European single common currency this week.

In the international financial markets, the dollar was flat against the euro on the week’s opening day, as traders awaited any hint of increased inflation prospects from the Federal Reserve after its widely-expected decision on US interest rates. In New York, the euro traded flat compared with last week close, at $1.2350

Meanwhile, the yen slipped against the dollar, but was well off its intraday lows, owing to uncertainty produced by an upcoming snap election in Japan. The dollar rose to 112.15 yen, up a quarter of a per cent from last week.

Sterling scored a one-month high against the dollar after data showed British raw material costs increased at the fastest annual rate in over 20 years in July. The pound climbed to $1.7850, up about 0.4 percent. It hit $1.7903 earlier in the session, its highest level since July 1.

On August 9, the dollar slipped after the Federal Reserve raised interest rates for the 10th consecutive time, as expected, but an accompanying statement disappointed some traders who were expecting a more hawkish stance on inflation. The euro rose modestly against the dollar, up 0.15 per cent compared with previous day’s, at $1.2366.

The dollar declined against the yen trading down 0.2 percent to 111.93 yen. Against the Swiss franc, the dollar was trading at 1.2592 francs, down 0.1 percent. Sterling hit a 5-week high against the dollar, tracking a broadly weaker US currency, which fell as investors largely discounted an expected Federal Reserve interest rate rise later in the day.

The pound was also supported by data showing Britain’s goods trade deficit with the rest of the world narrowed sharply in June. It was at $1.7832, steady on the day, having earlier hit a peak of $1.7917 - last seen at the end of June.

On August 10, the dollar dropped against a rallying yen as a strong domestic stock market and subsiding apprehension over an upcoming election pushed the Japanese currency higher.

In the New York session, the dollar was down nearly 1.2 per cent from a day earlier against the yen at 110.67 yen, its worst 1-day decline since China re-valued its currency in July. The euro’s heavy losses against the yen kept the euro zone currency relatively unchanged against the dollar, at $1.2370. For the fifth consecutive session, the euro was not able to finish the New York session above $1.24.

Sterling hit five-week highs against the dollar after the Bank of England’s quarterly inflation report suggested the BoE was not going to be as aggressive in cutting rates as markets had expected. Since the start of the year, the pound is still down around six percent against the dollar. Sterling had risen to the five-week high of $1.7970, up 0.5 per cent on the day, having broken a technical barrier at $1.7950, before trimming gains to $1.7945.

On August 11, the dollar sank broadly, falling to fresh 10-week lows against the euro and 6-week lows against the yen as investors once again began to consider the effect of the massive US trade deficit. The euro tackled a key technical level, rising 0.6 per cent to $1.2475, the highest since late May. The dollar fell well below the psychologically important level of 110 yen, to 109.57 yen, down 0.9 per cent. Sterling jumped to $1.8115, up 0.9 per cent, to its highest level since late June.

At the close of the week on August 12, the dollar was stuck near a six-week low against the yen and a two-and-a-half month nadir versus the euro, with investors worried about a possible sharp deterioration in the US trade deficit. Concern about the United States’ ability to fund its trade and current account deficits was the major driver of the dollar’s fall in the three years to 2004.

The dollar had edged up about 0.3 per cent from late New York levels to around 109.90 yen but was still close to a six-week low of 109.56 yen hit in the previous session. Growing confidence in Japan’s economy, foreign buying of Tokyo stocks and easing worries about a September 11 snap election have helped drive the Japanese currency up almost 2.5 per cent against the dollar since the opening of this week.

The euro was a touch weaker against the dollar at around $1.2455 after having jumped as high as $1.2476 on August 11. The market shrugged off a weaker headline figure for second-quarter growth in Japan and focused on an upbeat outlook for the economy’s recovery.

Sterling hit a six-week high against the dollar but later reversed gains as the US currency rose sharply in afternoon trade. Sterling has been riding high this week after the Bank of England signalled that it was in no hurry to cut interest rates again after lowering the cost of borrowing for the first time in two years last week. The pound was trading at $1.8105, down slightly on the day after hitting a six-week high of $1.8177 earlier.